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What is the effective annual yield of an investment that offers a nominal rate of 5% compound monthly? Daily?

What is the effective annual yield of an investment that offers a nominal rate of 5% compound monthly? Daily?
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5 votes
what is the effective annual yield of an investment that offers a nominal rate of 5% compound monthly? Daily?

User Ashfaque Rifaye
by
9.0k points

1 Answer

6 votes
Monthly
R=(1+0.05/12)^12)-1)*100
R=5.12%
Daily
R=(1+0.05/360)^360)-1)*100
R=5.13%
User Cjol
by
7.8k points
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